KKR To Buy Sports Investor Arctos; Robinhood's Prediction Markets

Summary

Bloomberg Business of Sports — Episode Summary

Episode: KKR To Buy Sports Investor Arctos; Robinhood's Prediction Markets
Date: January 9, 2026
Hosts: Michael Barr, Vanessa Perdomo, Damian Sassauer
Guests: Alison McNeely (Bloomberg News Private Equity Reporter), J.B. McKenzie (VP & GM of Futures and International, Robinhood Markets), Ira Budway (Bloomberg Sports Reporter)

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Episode Overview

This episode dives into two major stories at the intersection of sports, business, and finance:

1. KKR's Acquisition of Arctos Partners: Exploring the implications of private equity giant KKR moving decisively into sports ownership and asset management.
2. Robinhood's Expansion into Prediction Markets: A discussion with Robinhood's JB McKenzie about their push into prediction markets—how they differ from traditional sports betting, and the regulatory/technological forces shaping this emerging trend.

The show concludes with a roundtable of sports business predictions for 2026, including deep dives into private equity’s influence in college sports, women’s sports economics, and the ever-changing world of professional franchises.

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KKR Set to Acquire Arctos Partners: Private Equity's Sports Play

Key Discussion Points

Arctos Acquisition: The Deal and Its Significance

• KKR—one of the world’s largest and oldest private equity firms—is acquiring Arctos Partners, a sports-focused PE firm, in a deal valued around $1B (04:13–05:26).
• This represents a major move from “edge” sports investments (media/gaming) into direct (minority) team ownership.

"Kkr, you know, one of the oldest private equity firms in the United States, really in the world, and kind of the granddaddy of the asset class, if you will...this Arctos deal...would really move them in a meaningful way into minority team ownership."
— Alison McNeely, 04:42

Why Arctos? Why Now?

• KKR was already in related fields (media, stadium financing, gaming, lending) but lacked deep exposure to direct team ownership (05:42).
• Alison McNeely notes team ownership is “a totally different ballgame...They're really kind of assessing the landscape,” looking for high-value, scalable bets (05:42–06:19).

Navigating League Rules and Potential Conflicts

• Sports leagues (NHL, NBA, NFL, etc.) tightly control who can invest in franchises—there's extensive vetting to avoid conflicts of interest (07:36–09:12).
• Leagues are reviewing the KKR/Arctos deal’s possible conflicts, e.g., “is there some athlete somewhere who's a pitch man for a KKR portfolio that they're not aware of?” (07:36).

What’s the Strategic Value?

• Arctos brings "boots on the ground"—instantly connecting KKR to multiple major leagues.
• This could give KKR an inside track as a “big, money giant” with “clearance in all the leagues” and turn it into a powerhouse across college and women's sports sectors too (09:54–11:24).

Barriers and Timeline

• The deal's completion depends on all leagues’ approvals—a process that could take months, given KKR’s vast, complex portfolio (08:52–09:16).

Changing Sports Ownership: The Big Picture

• KKR (and private equity) have access to vast, continuous capital—including new retail investment products.
• This raises questions about the potential imbalance between individual (e.g. Jerry Jones of the Cowboys) and institutional owners (12:01–13:22).

"They just have a ton of money coming in all the time that they can put to work in potentially in sports." — Alison McNeely, 13:01

Winners and Valuations

• Valuation pegged around $1B, plus "earnouts and incentives" for the retained Arctos senior team, based on future performance (13:47–14:09).
• The deal could further push money and institutional sophistication into underdeveloped sectors like women’s and college sports.

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Robinhood's Push Into Prediction Markets

Key Insights and Industry Context

Why Prediction Markets Now?

• Robinhood began offering prediction markets in 2025, starting with the US presidential election, as part of its vision for a "financial super app" (17:53–18:45).
• JB McKenzie emphasizes the distinction between prediction markets and sports betting—predictions are traded on public, CFTC-regulated exchanges with no “house,” unlike classic sportsbooks (19:10–20:42).

"Prediction markets...use the identical structure as equity options in future markets...It's a centralized order book...unlike a sportsbook where the sportsbook sets the line." — J.B. McKenzie, 19:10

Transparency and Regulation

• Prediction markets operate via central order books, with transparent pricing and full collateralization—every participant sees the same price (19:10–20:42; 22:57).
• They are CFTC-regulated, with strict KYC and anti-money laundering (AML) compliance.

Risk Management and Product Design

• Robinhood only lists markets with sufficient liquidity and mainstream interest (22:57–24:30).
• Trades are fully collateralized; users can create complex “custom combos,” akin to parlays, starting with NFL playoffs (24:46–25:48).

AI, Tools, and the Future of User Engagement

• Robinhood's Cortex AI chatbot gives real-time info and alerts, hinting at the convergence of financial and sports analytics (25:48–27:54).
• “AI now is making it even more accessible so that you can then make great decisions...I think it's going to continue to play an important role when it comes into the sports world.”
  — J.B. McKenzie, 27:37

Insider Information and KYC

• The danger of insider trading (especially in politics or economics, less so in sports) is managed through robust KYC, employment checks, and data verification (27:54–29:32).

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Sports Business Predictions for 2026

Exploring Key Trends (33:34–44:15)

Institutional Capital and College Sports

• Ira Budway predicts that private equity’s anticipated flood into college sports will “stall out.” Initial deals (like Utah/Otro Capital, Big 12/Redbird & Weatherford) keep faltering at the approval stage (34:53–37:07).
  • University leadership questions whether PE money is needed, especially when cheap bond financing is available.

"They bring it to the board of regents... that's where it stops...Are we losing governance? ...they keep reshaping these deals to try to get them over the finish line. And I think by the time you do that, they become maybe less attractive."
— Ira Budway, 36:08

Deal Structure and Foreign Investment Risks

• University-PE deals are often structured through holding companies that capture future media and sponsorship revenue—rarely direct equity.
• There's minimal regulation preventing foreign/institutional investment, but for private universities, essentially “they govern themselves” (37:26–39:19).

College Athlete Compensation

• Schools are now officially spending up to $20M annually on football player compensation, with star quarterbacks commanding up to $5M (41:57–42:29).

Major League Spending & Team Sales

• MLB increasingly rewards big spending (Dodgers, Yankees, Mets), as “money rules all”—expect more teams to emulate that (40:22–41:18).
• NFL team sales are forecast (Saints, Seahawks), with franchise valuations climbing rapidly, requiring leagues to “keep changing their rules to allow more institutional money in simply for the reason that it's hard to find people with cash sitting around" (43:56).

"The NFL, it's...They are distinct among all sports...audience size...the way they share revenue... these clubs, they don't lose money in the meantime. So you get an asset that's probably going to grow in value and while you're holding it, you're not bleeding money."
— Ira Budway, 43:13

Women's Sports

• Vanessa Perdomo calls attention to a “crisis” in women’s sports—success isn’t translating into adequate player compensation (34:11–46:00).

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Memorable Quotes

• On Sports Ownership Shifts:
  “It has the potential as more and more of these huge money managers come into sports, it has the potential to fundamentally change the landscape. They are so deep pocketed.”
  — Alison McNeely, 12:33

• On Prediction Markets’ Edge:
  “We’re removing the conflict...in this case, we look at you as saying you can buy and sell and come in and out of that trade whenever you want. It has no impact on our book.”
  — J.B. McKenzie, 21:13

• On Private Equity’s College Sports Roadblocks:
  “Once the first deals get done, it’s going to be floodgates...but I think by the time these get done, they may not be as exciting for everyone involved as everyone has said.”
  — Ira Budway, 34:57

• On Women's Sports Urgency:
  “Women's sports need to kind of pay their players.”
  — Vanessa Perdomo, 34:11

• On NFL Franchise Values and Access:
  “The NFL...they may have to keep changing their rules to allow more institutional money in simply for the reason that it's hard to find people with cash sitting around.”
  — Ira Budway, 43:58

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Key Timestamps

• KKR-Arctos Deal Introduction & Analysis: 04:13–14:27
• Robinhood Prediction Markets Deep Dive: 17:24–29:32
• Sports Business Predictions Panel: 33:34–44:15

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Tone & Style

Hosts and guests maintain a conversational, informed, and sometimes irreverent tone, mixing deep financial analysis with sports fan enthusiasm. The episode is rich with context for anyone interested in the financial shifts powering modern sports—from the locker room to Wall Street.

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Recommended For:
Investors, industry insiders, sports business aficionados, and anyone fascinated by the merging worlds of finance, technology, and pro sports management.

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Listen for:
How billion-dollar deals are literally changing the game at every level; why prediction markets could seriously disrupt sports betting; and the coming battle for control—and compensation—in both college and women’s sports.

Transcript

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[Michael Barr]

Radio. Hello. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael.

[Damian Sassauer]

Barr. I'm Damian.

[Vanessa Perdomo]

Sassauer. And I'm Vanessa.

[Michael Barr]

Perdomo. Coming up today, we'll talk with vice president and general manager of Futures and International for Robinhood Markets about his company pushing into prediction.

[J.B. McKenzie]

Markets. The goal that I was brought in for was to begin to offer not only our US Based product internationally, but also to develop a futures product here in the US that we could offer out to our retail investors. And in that pursuit to offer, I will say the futures product is where we developed an opportunity to offer prediction markets out to our end clients. And so a little over 12 months ago, we launched prediction markets on the presidential election and then from there we've continued to build that product out.

[Damian Sassauer]

And we are looking into our crystal ball for 2026. Our team of sports business reporters here at Bloomberg News got together to share what they think is in store for the sports world in the new.

[Vanessa Perdomo]

Year. And you're going to want to hear it. We know somebody, we're pretty.

[Michael Barr]

Smart. Yes. All that is straight ahead on the Bloomberg Business of Sports. But we start with a big story in the world of sports investing.

[Damian Sassauer]

And it is a big story. Michael barr, Private equity giant KKR is working on a deal to acquire Arctos Partners, a deal that values the sports focused private equity firm at about.

[Vanessa Perdomo]

Billion. For more on the deal, we welcome Bloomberg News private Equity reporter Alison McNeely in the studio. Alison, welcome to the Bloomberg Business of Sports. Thanks so much for joining.

[Alison McNeely]

Us. Thank you for having.

[Michael Barr]

Me. Now what happens when this deal is set upon the landscape? Will it change everything in.

[Alison McNeely]

Sports? It's certainly a significant development in terms of the institutional capital that is quickly spread, swarming into seemingly all areas of sports. Kkr, you know, one of the oldest private equity firms in the United States, really in the world, and kind of the granddaddy of the asset class, if you will. They have been investing for A few years now, sort of around the edges of sports and media and entertainment. But this Arctos deal that is on the table with the leagues, this would really move them in a meaningful way into minority team ownership and, you know, put. Put another big money player in the business of owning sports.

[Vanessa Perdomo]

Teams. That's exactly what I wanted to ask you, Alison, was has KKR been looking to get more into exactly that, like you said, into team ownership? Is that exactly where they looked at Arctos? Has it been something that. Because you said they're invested in gaming and other things around. But team ownership is completely different.

[Alison McNeely]

Ballgame. It is a totally different ballgame. So KKR is really, as I have heard from sources that I've spoken with, they're really kind of looking at all the opportunities. So obviously Arcto Steel would put them into team ownership. But, you know, they're looking at stadium financing, they're looking at media rights, they're looking at, you know, lending. You know, they have been invested in some of these ancillary sort of services businesses. So they're really kind of assessing the landscape. I think the consensus view in the private equity industry is just that sports is a huge opportunity and there's a lot of money to be made in it, depending on kind of which.

[Damian Sassauer]

Angle you tackle it from consolidation. Right. I mean, we know that, you know, the NFL, you know, has basically limited the number of teams or the stake sizes that private equity firms can take and, you know, professional franchises. You know, do you foresee that this type of a deal, consolidation in the industry can create some issues there, can perhaps create some forced liquidation, so to speak. Is that. Is that a.

[Alison McNeely]

Risk? I'm not sure that that's a risk at this point in time, but I would maybe not be the best person to comment on that. What I think is happening more than anything right now is folks in private equity from the investing side are kind of looking. Everybody's looking for their way in and how they sort of tackle that and who might be willing to sell to them or who might be willing to come into the club is kind of what's most top of mind for these.

[Michael Barr]

Managers. I remember back in the day here I go back when you could buy the Detroit Tigers for $36. And if you had 36 ships, you know what, C.J. and if you had the sponsorship from Fred's Bait Shop, you were good to go. Now, not only owning the team means something, but you have to have the sponsorships as well to make a whole bunch of.

[Alison McNeely]

Money. And the sponsorship thing is A really interesting question, because one thing that I've heard from speaking to people kind of around sports investing is the potential for conflicts is a really, really big issue for. For them. And certainly that's an issue. I shouldn't say issue, but that's a question for this deal. And right now we're, you know, we're hearing that this deal has gone to the leagues to start to get their approval. And so they're kind of, as I understand it, running checks to basically find out, like, you know, is there some athlete somewhere who's, you know, a pitch man for a KKR portfolio that they're not aware of that might create some kind of potential conflict? So, yes, there's tons of money to be had in sponsorship, and, you know, that obviously plays into the valuations of these teams and these.

[Vanessa Perdomo]

Assets. And we are speaking with Bloomberg News private Equity reporter Allison McNeely. Alison, when you're just exactly on what you're talking about, when they're talking about how these leagues have to run checks, I mean, Arctos is into the NHL, the NFL, the NBA, all these different leagues. So with a deal like this, and they've, you know, they're agreed to acquire it, but all these leagues have to say yes, and how long does something like that take to. To get over the.

[Alison McNeely]

Line? So that can just depend. I've heard that it can take months, so I don't know that we know, or I certainly don't have any reporting at this time that indicates exactly how. How long it might take. But, you know, it can take several months. It can be, you know, a very complex and certainly a thorough process.

[Vanessa Perdomo]

Considering also KKR's vast portfolio. Yeah.

[Alison McNeely]

Yeah. They have $723 billion in assets under management as of the end of the third quarter. They're one of the largest private equity firms in the world. They're constantly getting involved in new areas of investing, and, you know, you got to run. Run the traps and see, you know, if there are any.

[Damian Sassauer]

Conflicts. All right, so I get it. So, I mean, basically, the acquisition goes through. We have a bigger bet or Arktos with some better institutional capital behind it. What comes next? I mean, they own psg, they own the Devils, they own professional football teams. I mean, where do they go next? What do you think comes next for firms such as.

[Alison McNeely]

Arctos? So for a firm like Arctos, the value proposition that they bring to KKR is essentially giving them an entry point into all of these leagues. You know, as you noted earlier, they're already invested with teams in the Major four leagues. So they kind of have boots on the ground. And that's a real competitive advantage because some of the other private equity firms who are in sports investing, there are certain leagues that they can invest in because of, you know, there's one guy at the firm, you know, the co president, the co founder or something like that, who is a investor as a person, as an individual in a sports team. And so therefore the investment firm, it can be very tricky for them to invest as an institutional investor in the sports team. And so this deal, potentially, because Arctos doesn't have those issues and because kkr, to my knowledge, doesn't have those issues, what this really means for Arctos is they now have big, you know, money giant behind them. They kind of have clearance in all the leagues already. And, you know, they have access to the really sophisticated operational and investing capacity of KKR to kind of grow into all sorts of other areas. Certainly when I talk to people who invest in sports, the two themes that come up over and over again are college sports and women's sports. So you have to wonder, like, are they going to start doing deals in that space? I don't know. But that's certainly like a question that would be a good one to.

[Vanessa Perdomo]

Ask to bring more money into women's sports. I'm all about it. Right. You had just said something on that, is that not every, you know, private equity is allowed to invest in certain leagues. In the NFL, there's only about six or so that are allowed to invest in Archers is one of them, but KKR technically wasn't. So is that something else that they have to check before? Do they now have to be approved by. As a official.

[Alison McNeely]

Partner? Exactly, exactly. Yeah. So, so by becoming the owner of Arctos and sort of absorbing it into their, their firm, KKR now has to get all the approvals that. Excuse me, that Arctos got before. So that's exactly, that's exactly what would.

[Michael Barr]

Happen. Right now I want to compare two different types of owners at the, especially in the NFL. One, you have Jerry Jones, owner of the Dallas Cowboys, and he's going to do it the way he's going to do it. Then you have other teams where you have a lot of private equity owners also involved. Can a guy like a Jerry Jones compete with a team that has a lot of money to.

[Alison McNeely]

It? I have no.

[Michael Barr]

Idea.

[Alison McNeely]

Yeah, no, but that's actually a really good question because it, it, it has the potential as more and more of these huge money managers come into sports, it has the potential to fundamentally Change the landscape. They are so deep pocketed. You know, KKR and their peers are bringing in fresh dollars constantly. We haven't even talked about wealth. You know, private equity firms are trying to reach individual investors now and they're creating all sports sorts of investment products to market to people in their brokerage account and their 401k account. And so, you know, if you have all that retail dollars coming in as well as your pension funds and your traditional, they just have a ton of money coming in all the time that they can put to work in, you know, potentially in.

[Vanessa Perdomo]

Sports. Alison, we've been talking a lot about how this is a win for KKR and getting these getting into team ownership. But how big of a win is this for Arctos as the valuation proposition that they got and how big of a win is it for.

[Alison McNeely]

Them? I mean, I would say that, you know, the, the individuals at Arctos with equity are probably.

[Vanessa Perdomo]

Happy 1 billion or $1.5 billion.

[Alison McNeely]

Valuation. So the valuation is around $1 billion. But the way the deal as I understand it from speaking with people who are familiar with it is that there are sort of what they call earnouts or incentives and basically they bring over the senior team and then depending on how the business performs, that can kind of potentially boost the valuation. And so yeah, like we're talking.

[Damian Sassauer]

There'S a kicker in it for Ian Charles is what you mean. Yeah, no, I mean, well, I mean, let's be clear. I mean it's going to be an interesting, it's going to be an interesting scenario to say the least. Alison, thank you so much for joining us here today on the Bloomberg Business of sports. Alison McNeely, Bloomberg News Private equity.

[Alison McNeely]

Reporter. Thank you, thank you for having.

[Vanessa Perdomo]

Me. Up next, Robinhood's move into prediction.

[Michael Barr]

Markets. Today we got another old friend of the show. We're just piling them on all this week for Damien Sass, our and Vanessa Perdomo. I'm Michael Barr. You are listening to the Bloomberg Business of sports from Bloomberg Radio around the.

World. Support for the show comes from public. On public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500 then you can invest in a few clicks. Generated Assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com disclosures.

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Business of Sports from Bloomberg.

[Michael Barr]

Radio. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael.

[Damian Sassauer]

Barr. I'm Damian.

[Vanessa Perdomo]

Sasshour. And I'm Vanessa.

[Michael Barr]

Perdomo. Robinhood is pushing its way into prediction markets and here to talk about the company's expansion and growth in the space is J.B. mcKenzie. He's Vice President and General Manager of Futures and International at Robinhood.

[Damian Sassauer]

Markets. JB welcome to the Bloomberg Business of.

[J.B. McKenzie]

Sports. Thanks for having.

[Michael Barr]

Me. You are Vice President General Manager of Futures and International Robin Hood Market. Tell us about.

[J.B. McKenzie]

That. Yeah, I joined almost three years ago to the day and my in the goal that I was brought in for was to begin to offer not only our US Based product internationally but also to develop a futures product here in the US that we could offer out to our retail investors. And in that pursuit to offer I will say the futures product is where we developed an opportunity to offer prediction markets to out to our end clients. And so a little over 12 months ago, we launched prediction markets on the presidential election. And then from there we've continued to build that product out. But it was all with this idea of creating the one stop shop for everybody to be able to trade. That sort of financial super app that our CEO Vlad has been envisioning and pushing us to develop is what we started to.

[Vanessa Perdomo]

Create. And I mean, I mean, what a year it really was right in 2025 for prediction markets. It feels like, you know, you know, back in 2018, the big new word was sports betting. And it was all this stuff and we talk about it a lot on this show, sports Betting. But now it feels like prediction markets is this new hot thing and everyone's talking about it. Tell us about how they differ from each other and why you think that prediction markets are getting so popular as a medium right.

[J.B. McKenzie]

Now. No, Vanessa, absolutely. I think it's a great question and I think the first thing I would start off with is, is that prediction markets, even just overall, whether it's sports or not sports, they actually use the identical structure as equity options in future markets. And what that means is it's a centralized order books where bids and offers come in from other participants in the markets. Unlike let's say a sports book where the sports book sets the line and creates the market and then you trade against the sportsbook. So there's sort of this inherent conflict, right, where the sportsbook is actually giving you a price and then a product and in some cases it will, it will reap a reward based upon you not being successful in that trade that you make. So I think that's the first thing. I think the second area that's really important about it is with that centralized order book comes transparency and consistency. And what I mean by that is whether you're a customer in New York or a customer in Illinois, from where I'm from, you get the identical price for the trade that you're making. You see the same thing, the cost is the same, the price is the same, it's transparent for all the participants that are in the market. Again, just like what we see out of the, the traditional equities and futures and options markets. And then I think the third thing that's important about this is this is a CFTC or federally regulated product. So we follow very strict rules that have been put into place for whether that's opening accounts, KYC, AML, money movement oversight, etc. So really those are the kind of the three key differences where you see on the other side of the sports that's much more oriented towards state by state.

[Damian Sassauer]

Regulation. JB so you know, you have to help me out here. You're mentioning central limit order books, CFTC regulated product. And yet, you know, we see, you know, some markets on whether or not Maduro is going to be ousted last year and paying out. You know, I think there was a news article just the other day I was reading $400,000 to someone who was, you know, placing bets, you know, you know, into, you know, what happened, you know, you know, just recently curious to hear how you manage that risk. How do you manage that two way exposure? Are there two sides to the trade? Talk to us a little bit more about.

[J.B. McKenzie]

That. No, Damon, I think that's a great question. And with all of these markets, it is a two sided trade. So Robinhood acts as an agency market, meaning what we do is we allow our clients to access an exchange where the, in this case the buyers and sellers come together. Right? So we don't participate in the, in the market, we don't make markets, we don't take positions. There's no risk on from a Robinhood standpoint, the way in which that trade occurs is there's a person out there, whether that's a market maker, whether that's an individual, I don't, we don't know what that is, who basically said I believe there's X percentage chance that this happens. And on the other side is another person who says I believe that, I agree with that and I want to take the other side of that trade. So it's actually interesting, it does work. Just like if you think about a traditional market that's out there where it may feel a little bit awkward because of what it is you're trading. But at the end of the day it's someone who believes that the probability of this occurring is happening is let's say at 51%. And that opposite side is willing to say I'll put that price up there and I'll actually make a trade for it. So it's really creating the efficiency of the overall markets coming into this decision making process. But we're removing the conflict that's in place, which is one side is actually hoping that you are incorrect in that trade. In this case we look at you as saying you can buy and sell and come in and out of that trade whenever you want. It has no impact on our book or how we do it because we don't take the opposite side of that trade. All we're sitting there saying is here's products that make sense that traders want to trade and we give access to.

[Damian Sassauer]

Them. Well jp, how about those low probability outcomes? I mean we're talking about Maduro, that was a 5050, but you know, there are some others, you know, I mean I don't know whether a UFO's going to land on earth next year, but talk to us a little bit about how you guys manage risk around like 1 to 2% or less probability type.

[J.B. McKenzie]

Outcomes. So first off these are fully collateralized products and what that means is, is that you actually have to have the money in your account to place the trade. So first off the risk that comes into play here is to the end user that does it, right? So if they decide to buy something at a 2% probability, you know, that's just going to be multiplied by the money they have in their account. If they have enough of that money, they're gonna be able to place that trade. That also being said is we don't offer every single product that's out there. So some of the products you're talking about, some of them we do and some of them we don't offer. We actually look at those products and say to ourselves, is there enough liquidity and, or interest in that product? The vast majority of the products that we look to offer out there are not running at a 98.2type of probability until the event becomes closer and closer to occurring or coming to resolution for us. What we look for are those products that are out there that have the opportunity for the market to participate in them at a probability that's greater than that. Now some cases that works and sometimes it doesn't. But what you do see is very much like zero dated options. The probabilities compress quite a bit as you get closer to the end of that day for the example of a zero day adoption. But in these events, as you get closer to the event coming to fruition, so pick a sport, you know, the probability at the beginning of the game is going to be much wider than it is going to, sorry, it's going to be much tighter, meaning sort of 50, 50, 60, 40, 70, 30 than it will be at the end of the game when the outcome looks to be coming to its, its finality where the score is, you know, team A is beating team B. Same thing holds true with something like the Fed rate cut. The Fed rate cut today is going to be much different on a probability than when it will be. As you get closer and closer to when they make that.

[Michael Barr]

Announcement. We are talking with J.B. mcKenzie, Vice President and general manager of Futures and International Robin Hood Markets. You guys, as we are now in the NFL playoffs, you guys rolled out the custom combos. What is.

[J.B. McKenzie]

That? So basically what they are is the ability for the customer to be able to select specific components and create their own trade, similar to what in the sports world is a parlay. And what that means is I can go and select. Let's say I grew up near Buffalo, so I'm going to be a little bit of a homer here. So I'm going to take the Buffalo Bills and I want to also pick Josh Allen, will have two touchdowns. I can go and create that combo together where it'll price into the market and provide me back a probability of that outcome. And I can then make the decision of whether or not to place that trade. So we just, we just started rolling this out this week for the first week of playoffs, playoffs, as you mentioned there, Michael. And we really think that this is very an interesting product because we're seeing more and more of our customers wanting to go build this as part of their overall portfolios while we're starting in the NFL. We think that this will be a product that will roll out to all asset classes longer term. But right now what we're doing is starting off specifically with the NFL playoff games that start this.

[Vanessa Perdomo]

Weekend. You know, JB you mentioned there, obviously we were talking about the combos and you guys just introducing that. One of the other things you guys just introduced was Cortex, this AI chatbot that kind of, that gives you advice, right? And I'm curious what your thoughts on are on these tools that are used for financial advice and things like that, other things that you guys offer and how they're converging with the sports.

[J.B. McKenzie]

Market. So I think that's a really interesting question. And the way I like to think about this, Vanessa, is when I started in the markets 20 plus years ago, the only thing we had was the ability to phone call into a broker to figure out what maybe one of like Bloomberg showed on the television ticker and say, oh, I want to go buy something. Like, you had very limited access to tools. And what's happened since then is this dramatic revolution where we've been able to get both data as well as charting and capabilities onto our mobile devices. And I think the natural progression with that has come into the AI world where what we're able to now do is utilize AI or Cortex in our, in this instance to Accumulate information from a variety of sources and provide alerts to our end customers to tell them that something is moving that of interest to them. So while our Cortex product that we offer today is much more focused on just providing them generic information of hey, this product is moving up or down. You see that happening already today in the overall sports world in many different ways. Where there's notifications or you even see it when you watch games with, you'll see AWS is powering a lot of the NFL statistics out there and they're talking about the probability of a team scoring a touchdown inside the 20 yard line in the red zone or the ability to get third down in less than five. And that information now is so handy at the fingertips of traders, I think AI now is making it even more accessible so that you can then make great decisions. I think as you've already seen, AI take over, I think all parts of the world in many ways. I think it's going to continue to play an important role when it comes into the sports world because it can actually consume and analyze data so quickly and provide it back to you that it allows you as a trader to make a really good decision very, very.

[Damian Sassauer]

Quickly. Jb, you talk about KYC and knowing your client, but doesn't that become really, really difficult when you move outside of sports into some of these other prediction markets like elections, economic events, where it's a different set of players who have quote unquote inside information. What's your KYC process and how do you protect Robinhood from those events working against.

[J.B. McKenzie]

You? That's a great question because obviously it's been in the news as of late is how do we control or have access to make sure that people who access these markets don't have insider knowledge? I think one of the first things I would say is that the financial services market has been doing this for decades and does a really, really good job when you look at the overall size of participation. Right. So if you look at the financial services market in the United States, I mean it dwarfs the participation of that of what you see in the sports world. Now I get to your point of how do you make sure that someone that's working in I'll make it up in an election campaign isn't also placing a trade because they have some piece of information for it. So for that what it is, is we've been implementing a variety of tools that we can utilize for. So part of our KYC and AML process is we collect information about you as a person. We know your job, your employment, we know where you're located. All that information is required for us to develop and pull through and collect for us to be able to open up an account from there. What we also then do is we do analysis of of sort of of where you may fit in various types of credit bureaus and Overall sort of LexisNexis and third party platforms that we get an understanding of the information you provided to us is correct and accurate because that's one of the things that we have to do as part of that Know your customer.

[Michael Barr]

Requirements. J.B. mcKenzie, Vice President and General Manager of Futures and International Robin Hood Markets Aha. You're an old friend of the show now. Thank you my friend for joining us on the Bloomberg Business of Sports. We really do appreciate.

[J.B. McKenzie]

It. Thanks for having me. Looking forward to coming back.

[Michael Barr]

Again. Up next, we look at the the future what Bloomberg's top sports reporters see coming next in the world of sports in 2026 for Damian Sassauer and Vanessa Perdomo, I'm Michael Barr. You are listening to the Bloomberg Business of Sports Bloomberg Radio around the.

World. Support for the show comes from public on public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation, recommendation or advice. Complete disclosures available at public.com disclosures.

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[Vanessa Perdomo]

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Bloomberg Business of Sports from Bloomberg.

[Michael Barr]

Radio. Thank you for joining us on the Bloomberg Business of Sports. We explore the big money issues in the world of sports. I'm Michael.

[Damian Sassauer]

Barr. I'm Damian.

[Vanessa Perdomo]

Sasshour. And I'm Vanessa.

[Damian Sassauer]

Perdomo. Our top sports reporters, including Vanessa Perdomo, put out a special edition of the Business of Sports newsletter looking into their crystal ball as to what might very well happen in the world of sports as we look ahead to.

[Vanessa Perdomo]

2026. So the fun thing we did was we did our wrap on 2025. We gave out some awards. You know, Asia Wilson, Athlete of the year. That was the best.

[Michael Barr]

One. Gray gets it.

[J.B. McKenzie]

In. Wilson on the drive, the.

[Vanessa Perdomo]

Fade. You.

[Damian Sassauer]

Bet. You.

[J.B. McKenzie]

Bet. Asia Wilson with 0.1 to.

[Vanessa Perdomo]

Go. And then we did a 2026 look ahead. As in she might have gotten, you know, player of the year, but the WNBA and women's sports are in a crisis. And that was my prediction for this year. Women's sports need to kind of pay their players. My other colleague, Ira, he, he predicted that private equity is not going to make as big of a splash in college sports as we.

[Michael Barr]

Think. And here to give us the secret tip on who's going to win the super bowl because I got to put some money on it. Joining us now, biggest sports predictions for the new year, Bloomberg News global sports business reporter Ira Budway. Ira, welcome back to the Bloomberg News Business of.

[Ira Budway]

Sports. Always a.

[Michael Barr]

Pleasure. Biggest prediction that you hit the money.

[Ira Budway]

On. So I'm anticipating that this big private equity push into college sports is going to maybe stall out. And I think everyone expects that once the first deals get done, it's going to be floodgates. But we've seen a couple deals get almost to the finish line now. One, a school deal between Utah and this outfit called Otro Capital. And the other, more recently, a conference wide deal between the Big 12 and Redbird and Weatherford who put together a thing called Collegiate Athletic Solutions cas. And both of those deals have been said to be kind of the beginning of a flood. But I think one, those aren't done. And two, we don't really know the terms yet. And I think really the devil's in the details here. And I think by the time these get done, they may not be as exciting for everyone involved as everyone has.

[Vanessa Perdomo]

Said. I think the thing that's interesting is that you mentioned they're not done. And everyone thinks, oh, they're all these things have been written, they're coming, it's coming. And then these deals get close, they don't get finished. In your story from this year and our predictions, you kind of mapped out exactly why they get close and don't get finished. Can you explain that a little.

[Ira Budway]

More? Yeah, I think a lot of the time these deals are negotiated first between athletic directors, maybe conference heads and the private investment shops. And then they bring it to the board of regents, they bring it to the trustees, they bring it to the broader leadership of the school and that's where it stops, or at least where there's hiccups because these schools look at it and go, well, wait a minute, can't we borrow money more cheaply somewhere else, maybe in the bond markets? Why are we doing this? Are we losing governance? And there's just a lot of questions and snags at that point. So they keep taking different hacks at it. You look at the Big 12, I think a year or so ago they were saying, we're going to sell 15 to 20% of the entire conference to a private equity firm. And then that didn't happen. And now they're saying, no, no, we're going to put a pot of money that each school, if they want to, can borrow from. So they keep reshaping these deals to try to get them over the finish line. And I think by the time you do that, they become maybe less attractive than everyone's.

[Damian Sassauer]

Imagining. So Ira, here's my question, right? I mean, we keep saying private equity, private equity investment, it's really institutional capital, right? And that can mean a lot of different things. It's not necessarily private equity. So my question is, are there any rules preventing, let's call it foreign players, foreign investors from taking a stake in an American.

[Ira Budway]

University? You know what these deals are shaping up to be? You're right, they're not stakes in anything. Except for in the case of Utah, it's like they create a separate holding company for the business interests of their.

[Damian Sassauer]

Athletic. Okay, I see what you're.

[Ira Budway]

Saying. So it's like the media, it's a non for.

[Damian Sassauer]

Profit. Right. The university itself.

[Ira Budway]

Right. Okay, I got you. So they say the athletic department will continue to exist. It will continue to make all decisions around personnel, players, coaches, everything like that. Schedules. There's going to be a separate company over here where the money for meteorites, tickets, sponsorships goes. And this private equity firm was going to help fund that company and it's going to have a claim on some of that future revenue. And so these deals are not equity deals and they're not even necessarily straight debt deals either. They're deals where the private equity fund says, here's some money. The institutional money says here's some money. And we expect if you hit certain revenue marks, we're going to get a pre negotiated share. So if you don't hit those revenue marks, there's money at risk for the institutional money. They might not get paid.

[Damian Sassauer]

Back. So I understand how that model works for a public university like University of Utah, but there's a lot of private universities out there, so a different model might very well work for them. I'm just thinking out loud and you know, where I'm going here, I think of live and how the Saudis came in and disrupted, you know, the sport of golf. You know, what's to stop, you know, some player from coming in, taking a stake, not in a hold code that controls the ticketing and the gate receipts, but controls the actual university itself.

[Ira Budway]

Or at least Its athletic department, or.

[Damian Sassauer]

At least its athletic department. Right. Which obviously is funding, you know, many respects, all of academia there. Right. So I just want to, you know, not all of it, obviously, tuition dollars help, too, but believe me, I can speak from experience, but that is exactly where I'm going with this. Like, is there any kind of guardrails in place to prevent a disruption of the American university.

[Ira Budway]

System? I mean, I think it's, you know, private universities, they pretty much govern themselves. Right. So they could if they wanted. I mean, I think the reality is they are facing a budget crunch. So these athletic departments are not contributing to the bottom line at the schools. They are spending more than they're bringing.

[Damian Sassauer]

In.

[Ira Budway]

Interesting. And that's happening because of essentially, player costs. Right now there's a new rule that says they can spend 20 million a year on rosters, and they are foregoing revenue from other sources in order to funnel it toward players. And so that is hitting the budgets to the tune of maybe $30 million a year. And in many cases, they're already spending all their money as it comes in. So that's why you're seeing institutional money come in here. They're saying, look, we'll give you some money up front. We know you have a budget crunch. We're going to show you how to make more. We're going to. We're going to show you how to sell more suites. We're going to show you how to do a better job with sponsorships. We're going to perform, professionalize your operation. And when we do that, you're going to give us some of your revenue in the.

[Michael Barr]

Future. Which brings me to the next question, a prediction you guys made in the article Major League Baseball. They're going to spend money, a lot of money. And yes, even Mr. Steve Cohen is going to spend a lot of money. Because now if you want to get to the playoffs, you got to have a fat.

[Ira Budway]

Wallet. Yeah. I mean, every year I feel like we have the playoffs and there's either. There's one of two discourses. There's some team that snuck in there without spending a lot, and we all talk about how you can still do that, or the big money teams dominate. And we all talk about how money rules all. But I think obviously it's a little bit of both. But we've seen these teams like the Dodgers, who are smart, well resourced, have a good farm system. Like, they do all the things and then they spend really big. And that is proving to be, you know, not surprisingly, a winning formula. And I Think you're going to see more teams try to do that. I think that's what Steve Cohen wants to do with the Mets, but.

[Vanessa Perdomo]

He has been unsuccessful in his spending. Quite, quite unsuccessful. But the Yankees need to get back to spending money, in my personal opinion. On your other prediction, though, Ira, when we're still talking about college football, because it is the college football playup, when we're looking at the prediction that you made and looking at, like you said, how colleges are spending money, you also did this report on trying to figure out how they were spending this $20 million and no one really was giving you information. But from what you've known, what you've done, reporting on what are the feelings from these institutions now that they have to do that and how and who are they spending the money.

[Ira Budway]

On? I mean, probably not surprisingly, they're spending the money on football players. You know, they get to spend 20 million of this revenue sharing potential on their players. But that's across all.

[Vanessa Perdomo]

Teams. It doesn't say, it doesn't say they need.

[Ira Budway]

To. Right. And it doesn't demand that they do any. But the market for a top quarterback now is approaching $5 million. So that's like a quarter of your money right there. So, but yeah, so there it looks like, at least at schools where they care about football, you're spending about 15 million of that 20 million on your football.

[Damian Sassauer]

Team. Well, Ira, let's stick with football here, but let's go pro, right? I mean, one of your predictions here is that we're going to see a couple sales in the year ahead, right? I mean, I'm not just talking, you know, private equity or some institutional capital taking stakes in NFL teams. I'm talking about outright sales. And the two teams that you flagged here, the New Orleans Saints and the Seattle Seahawks, who are right now the best team in the NFL heading into the playoffs. Just want to ask your opinion here. I mean, I mean, you know, we've talked about this in the past offline, Ira. The NFL, it's, it's, it's. They're eating the cake too, so to speak, right. With the new media deals they're doing and with 20, 28 coming up and they're going to be able to renegotiate out. But talk to us a little bit about these valuations. I think the Cowboys, if you just look at where they are now based on some of these recent deals, $14.4.

[Ira Budway]

Billion. Yeah, I'm pretty bullish in the case of the NFL, I think they are distinct among all sports in the US Anyway, because one, the audience size is just bigger than everybody else by a lot. And two, the way they've set it up with their players and the collective bargaining agreement and the way they share revenue revenue between teams, these clubs, they don't lose money in the meantime. So you get an asset that's probably going to grow in value and while you're holding it, you're not bleeding money. And I think that's not always the case in professional sports. So I expect these teams to keep setting records with these control.

[Michael Barr]

Sales. Well, I'm going to add this, too. I know we're running out of time, but it seems to me like private equity now is the key to all this.

Ownership.

[Ira Budway]

Yeah. I mean, you're looking the NFL, the all the leagues, they may have to keep changing their rules to allow more institutional money in simply for the reason that it's hard to find people with cash sitting around. You know, the list gets shorter and shorter and so they might need more institutional money just to keep the market.

[Michael Barr]

Moving. Well, sir, we love you, man. Our thanks to Bloomberg News global sports business reporter Ira Budway for joining.

[Vanessa Perdomo]

Us. We'll be diving into more of our big predictions for 2026 and next week's.

[Michael Barr]

Show. What happened at the time? This is what happens when you get good conversation. That does it for this edition of the Bloomberg Business of Sports. For Damien Sassower and Vanessa Perdomo, I'm Michael Barr. Tune in again next week for the latest on the stories moving big old money in the world of.

[Vanessa Perdomo]

Sports. And don't forget to subscribe to our podcast so you never miss an episode. Find it on Apple, Spotify, the the Bloomberg Business app and your favorite podcast.

[Michael Barr]

Platforms. You are listening not even the contraction. You are listening to the Bloomberg Business of sports from Bloomberg Radio. Around the.

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